Our commitment to the very long term
Super is a long-term investment, so it’s appropriate that we think about the
long-term prospects of the investments we make on our members’ behalf.
As part of the growing focus on sustainability, Telstra Super recognises the impact of environmental, social and corporate governance (ESG) issues on investment markets.
We are now participating in two major global forums that will help us achieve a better understanding of ESG-associated risks. We are also engaging with all our fund managers to assess their current awareness of the issues and encourage them to consider ESG factors more actively.
Our involvement in these initiatives reflects the responsibility we feel to help shape a sustainable economic future and protect the whole community’s ongoing quality of life.
The UN Principles for Responsible Investing (UN PRI)
The UN PRI have been developed by a group of the world’s largest institutional investors who came together at the invitation of the UN Secretary-General. The UN PRI organisation is increasingly seen as the peak global forum for financial service institutions to address the need for sustainability.
The UN PRI recognise the new consensus that ESG issues can affect investment performance and shareholder value.
That consensus implies that fund managers have a duty to give appropriate consideration to these issues, so the UN PRI provide a framework for doing so.
The Principles call for incorporation of ESG issues into investment analysis and decision-making, assisted by greater disclosure of those issues by all entities seeking investment.
One important and innovative aspect of the UN PRI is that they are intended to apply across entire diversified portfolios, not just to a select group of companies or specific asset classes. It is not intended that institutional investors like Telstra Super screen companies we are considering investing in to determine whether they already meet PRI criteria. Instead, we are encouraged to work with every company we may invest in to help them begin to make any necessary changes.
This approach is compatible with the existing concept of Socially Responsive Investment, but more collaborative and inclusive.
The UN anticipates that implementing the PRI will lead to more sustainable long-term financial returns and ‘a closer alignment between the objectives of institutional investors and those of society at large.’
As a signatory to the PRI, which are voluntary and aspirational, we have indicated our willingness to work towards seeking greater disclosure and incorporating ESG issues into our future decision-making.
In Phase 2 of the PRI process, the implementation of the Principles will be facilitated and dialogue between investors and the entities in which they may invest will be co-ordinated by the PRI organisation.
You can find out more about the Principles and the implementation process at www.unpri.org
The Carbon Disclosure Project (CDP)
The CDP is focussed entirely on protecting the physical environment through helping to monitor greenhouse emissions. An independent, not-for-profit organisation, it aims to generate constructive dialogue between major investors and major corporations over climate change.
Carbon emissions will be a future cost to companies and will affect the returns we can generate. Heavy emitters are compromising both the environment and the viability of our returns.
In the last 8 years the CDP has established itself as the international benchmark for carbon disclosure methodology. Major emitters are asked to complete a questionnaire that quantifies their carbon emissions, helps them to consider their energy use in a structured way and encourages them to formulate a strategy for tackling their ongoing generation of greenhouse gases.
The standard form of the questionnaire facilitates useful comparisons between different organisations and allows companies to benchmark their practices within each industry.
Now, having perfected the process, the CDP is moving quickly to accelerate carbon disclosure by approaching 3,000 of the world’s largest companies, collectively responsible for 27% of global emissions.
The CDP already represents institutional investors with a combined value of over US$57 trillion in assets under management. It will draw on their collective influence to bring about rapid evolutionary change.
To find out more about the CDP, and explore the largest database on corporate carbon emissions available, visit www.cdproject.net
Our participation in these two important forums will help ensure that we, our managers and the companies in which we invest are more firmly focussed than ever on the very long term.